Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 88 C 4539 -- James B. Parsons, Judge.

Bauer, Chief Judge, Cummings, and Cudahy, Circuit Judges.

Author: Bauer

BAUER, Chief Judge.

This case is before us on appeal from the district court's order granting plaintiffs' motion for a preliminary injunction. Plaintiffs, black and Hispanic lieutenants who passed the captain exam but have not yet been promoted to captain, brought an action to enjoin application of the Chicago Fire Department's "Captain Eligibility Rule" ("Captain Rule") to the battalion chief exam, which was scheduled to be given on August 13, 1988. The Captain Rule provides that "only Captains in the Fire Department shall be eligible for the examination of Battalion Chief in the Fire Department." Rule X, Section 5, City of Chicago Personnel Rules. Plaintiffs claimed that application of this rule to the upcoming exam will have an adverse impact upon minorities in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. The district court enjoined the application of the Captain Rule only as it applied to black and Hispanic lieutenants who had taken and passed the captain examination. From this injunction, the City of Chicago and the Chicago Fire Fighters Union, Local 2, International Association of Fire Fighters, AFL-CIO (the Union is a party to this lawsuit because its collective bargaining agreement with the City of Chicago includes the Captain Rule) have appealed. For the following reasons, we find that the district court abused its discretion in granting plaintiffs' motion for a preliminary injunction.

I.

The Fire Department of the City of Chicago is a paramilitary organization. It operates upon a chain-of-command basis, which means that firefighters progress through a series of ranks and each rank follows orders from the rank above it. Recruits enter the ranks as a firefighter or an engineer. Promotions from these two nonsupervisory ranks to the supervisory ranks (lieutenant, captain, and battalion chief) are made on the basis of two-day competitive exams. Personnel are only permitted to take the exam for the rank above which they are currently situated. For example, only lieutenants can take the captain exam and only captains can take the battalion chief exam. All those who pass the exam are automatically eligible for promotion to the next rank. From those eligible, promotion is usually made on the basis of seniority. (Minorities have been promoted out of order so that the Fire Department can meet its affirmative action goal.)

In May of 1988, plaintiffs filed a lawsuit against the City of Chicago, challenging one aspect of the Fire Department's system of promotion. Plaintiffs alleged that the Captain Rule had a disparate impact upon minorities in violation of Title VII (Count I) and that the Captain Rule violated the Order of Settlement in United States v. Albrecht, Nos. 73 C 661 and 80 C 1590 (N.D. Ill., March 31, 1980) (Count II). In this complaint, plaintiffs stated that they represent black and Hispanic lieutenants who, like the named plaintiffs, have taken and passed the captain exam but have not yet been promoted to captain. On July 1, 1988, plaintiffs filed a motion for a preliminary injunction. Plaintiffs sought an order allowing all lieutenants, not just those who had passed the captain exam, to take the battalion chief exam, scheduled for August 13, 1988.

The district court entered an order enjoining the application of the Captain Rule, but only with respect to those lieutenants who had passed the captain exam. The district court found that the Captain Rule adversely impacted upon minorities in two ways. First, the district court compared the percentages of minorities and whites eligible to take the battalion chief exam in light of the Captain Rule. By including all captains and lieutenants in the applicant pool, the court found that the eligibility rate of minorities was 73% of the eligibility rate of whites. Second, the court found that minorities were underrepresented in the upper ranks of the Fire Department compared to the percentage of minorities both in the work force and in the lower ranks of the Fire Department. The district court found that the Captain Rule was not justified as job-related because captains and lieutenants perform essentially the same duties. For these reasons, the district court concluded that plaintiffs had demonstrated a reasonable likelihood of success on the merits of their Title VII claim. In addition, the court concluded that plaintiffs would be prejudiced if they were not allowed to take the battalion chief exam. Because the last exam was given in 1978 and the City of Chicago has not set a date for the exam to follow the August 13th exam, the court found that plaintiffs might be denied the opportunity for promotion. For these reasons, the district court enjoined the application of the Captain Rule.

II.

On appellate review of a district court order granting or denying a motion for preliminary injunction, we ask whether the district court abused its discretion. Shaffer v. Globe Protection, Inc., 721 F.2d 1121, 1123 (7th Cir. 1983). In petitioning the court, plaintiffs must carry the burden of persuasion with respect to the four prerequisites of a preliminary injunction: (1) a reasonable likelihood of success on the merits; (2) irreparable injury and absence of an adequate remedy at law; (3) the threatened harm to the plaintiff outweighs the harm injunction may cause to the defendants; (4) that the granting of the injunction will not disserve the public interest. Id. (citations omitted).

A.

In order to demonstrate a reasonable likelihood of success on the merits of their Title VII claim, plaintiffs must show that the Captain Rule determines eligibility for promotion to battalion chief "in a significantly discriminatory pattern." Dothard v. Rawlinson, 433 U.S. 321, 329, 97 S. Ct. 2720, 53 L. Ed. 2d 786 (1977); Albemarle Paper Co. v. Moody, 422 U.S. 405, 425, 45 L. Ed. 2d 280, 95 S. Ct. 2362 (1975). The statistical disparity between the percentage of minorities eligible to take the battalion chief exam and the percentage of whites eligible to take the exam under the Captain Rule must be "significant" or "substantial." See Griggs v. Duke Power Co., 401 U.S. 424, 426, 28 L. Ed. 2d 158, 91 S. Ct. 849 (1971) ("requirements operate to disqualify Negroes at a substantially higher rate than white applicants"); Albemarle, 422 U.S. at 425 (plaintiffs are required to show "that the tests in question select applicants for hire or promotion in a racial pattern significantly different from that of the pool of applicants"); Washington v. Davis, 426 U.S. 229, 246-47, 48 L. Ed. 2d 597, 96 S. Ct. 2040 (1976) ("hiring and promotion practices disqualifying substantially disproportionate numbers of blacks"). The Supreme Court has stated that the significance of the statistical disparity should be determined on a "case-by-case approach." Watson v. Fort Worth Bank and Trust, 487 U.S. 977, 108 S. Ct. 2777, 2789, 101 L. Ed. 2d 827 n.3 (1988). In this case, the district court concluded that the Equal Employment Opportunity Commission's (EEOC) Uniform Guidelines on Employee Selection Procedures, 29 C.F.R. § 1609 (1987), was the appropriate benchmark by which to assess the impact of the Captain Rule. The Guidelines recommend a finding of disparate impact when a facially neutral standard results in a "selection rate for any sex, race or ethnic group which is less than four-fifths (or eighty percent) of the rate for the group with the highest selection rate." 29 C.F.R. § 1607.4.*fn1

To apply the EEOC's Guidelines, the district court must compare the number of people now eligible to take the test (in this case, the captains) with the number of people who would be eligible to take the test if the Captain Rule did not exist (the relevant labor pool). The district court assumed that, without the Captain Rule, all lieutenants would be eligible to take the exam. The district court found that, under the Captain Rule, the percentage of minorities eligible to take the exam (the number of black and Hispanic captains divided by the number of black and Hispanic captains and lieutenants) was 73% of the percentage of whites eligible to take the exam (the number of white captains divided by the number of white captains and lieutenants).

Factual determinations made by the trial court are reviewed under the "clearly erroneous" standard. The court's determination of the relevant labor pool, from which eligibility rate statistics are generated, is also "normally reviewable under the 'clearly erroneous' standard as an essentially factual matter within the special competence of the district court.'" Medina v. Reinhardt, 222 U.S. App. D.C. 371, 686 F.2d 997, 1004 (D.C. Cir. 1982) (quoting Castaneda v. Pickard, 648 F.2d 989, 1003 (5th Cir. 1981)). This court is not bound by that standard, however, "'if the trial court bases its findings upon a mistaken impression of ...

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